Where impact fees go: Municipalities need more clarity from state
January 6, 2017 12:00 AM
Auditor General Eugene DePasquale
By the Editorial Board
With the natural gas industry in a slowdown, it’s especially important for Pennsylvania municipalities to get the biggest possible bang from impact fees generated by drilling operations. A recent report by state Auditor General Eugene DePasquale indicated questionable spending by some counties and municipalities that he blamed on vague guidelines from the state.
At least some municipal officials stand behind their spending, however, and question whether the Legislature intended them to use the money for purposes as narrow as Mr. DePasquale’s audit suggested.
The Legislature needs to clarify the 2012 law covering impact fees so that everyone knows what is allowed and what is not.
Under that law, drilling operators must pay an impact fee based on natural gas prices and the number of wells in operation. Through 2014, the producers paid $856 million. Much of that money went to various state agencies, but nearly $430 million went to counties and municipalities affected by fracking.
Mr. DePasquale reviewed $85.6 million in impact fee spending by 10 counties and 20 municipalities and concluded that 24 percent of the funds — some $20 million — was spent in ways that didn’t conform to the law. The law cites 13 possible uses “associated with natural gas production.” The audit concluded that the spending often was not tied closely enough to drilling operations.
For example, the law permits use of impact fee money for “emergency preparedness and law enforcement,” but Mr. DePasquale’s audit called out Bradford County for using some of its allotment to operate a jail, Lycoming County for using a portion to buy land for a district judge’s office and Susquehanna County for using some of its share to buy an SUV for the district attorney’s office. What would have been more appropriate in Mr. DePasquale’s view? Perhaps special fire equipment needed to handle emergencies at well sites.
The law permits the use of impact fee money for “trails, parks and recreation,” but the audit questioned North Strabane for spending some of its money on fireworks, inflatable party rentals and a musical performance and Bradford County for spending funds on playground equipment, a boat dock and a community theater. A more appropriate use, according to the audit, would have been replacing recreational space displaced by drilling.
The guidelines are certainly vague, and it’s easy to see how local officials spent the money believing they were in the right. Some still do. Doug McLinko, chairman of the Bradford County commissioners, said he and colleagues ran their spending proposals past an attorney — “sometimes two of them” — and make no apologies for using some of the money to buy recreational equipment for children with disabilities. Frank Siffrinn, manager of North Strabane in Washington County, said his municipality also stands by its spending, some of which involved the opening of a township park and was recouped through sponsorship fees.
Those aren’t the only complaints. Mr. McLinko assailed Mr. DePasquale for criticizing the purchase of a “stinking swingset” when state officials need to provide better oversight of certain drilling companies’ royalty payment practices. Mr. Siffrinn said the audit led to his municipality receiving negative publicity when it did nothing wrong.
The state Public Utility Commission is responsible for collecting and disbursing impact fee money, but it isn’t set up to provide municipalities with guidance on spending. That leaves counties and municipalities twisting in the wind. If the Legislature wants the money spent on purposes very closely tied to fracking operations, it should amend the law to say so. If it wants to give counties and municipalities broad discretion, it should say that instead.
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